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tv   Bloomberg West  Bloomberg  July 7, 2014 11:00pm-12:01am EDT

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>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business. i am emily chang. first, a check on your headlines. cloud storage provider box has raised an additional $150 million in funding. people with knowledge of the situation say the latest round values box at $2.4 billion and buys the company some time after delaying its ipo. if you recall, box originally filed for the ipo in march and was hoping to raise $250 million in the offering. uber is temporarily cutting fares to step up competition against new york city taxi
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services. uber reduced fares for its uberx service by 20% in the big apple. uber will keep its regular commission for each ride and drivers will make less per trip so the company claims drivers should see more riders each day. well-known venture capitalist, tim draper, is now almost 30,000 bitcoins richer. draper was the highest bidder for a large amount of the bitcoin currency at an auction. bitcoins are part of a larger pool that was seized from a website. he will join us later. now, to our lead story -- box has raised $150 million in funding at a valuation of $2.4 billion. this according to people with knowledge of the situation. it gives box more to time to wait for favorable conditions before going public. the cloud storage provider had planned to go public last march
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but it delayed its ipo because of shaky market conditions. sources say tpg capital will get a seat on box's board. how much more time will the funding really buy box? we are joined by leslie picker in new york. what exactly does this mean about box's future? >> this gives them the opportunity to wait for better market conditions for it to do its ipo. $150 million provides a nice cash infusion but the cash burn rate is pretty high. it is unclear how long it will take them to go public, but sources have said perhaps after labor day would be a good target date when most investors are back from their summer vacations and people are paying closer attention to the business model. >> their financial situation has not changed. did they make a mistake when they filed to go public? >> i think they underestimated
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what investors were looking for at the time they went public. if you recall, it was the spring, there was this big frenzy over ipos. companies were slipping by with less than superb fundamentals. box probably they thought they could do the same thing. when they did go public, it alerted investors because they were losing twice as much money as they were making. that was certainly a signal that the quality of companies going public were not so strong as they saw in the fourth quarter. it sent a bit of a shock wave throughout the tech ipo market. >> they are burning lots of cash. they spend a lot on marketing. have the tides changed? are they working on changing those numbers or pretty much staying the course? >> it is unclear whether they are changing their business model, but this cash infusion from tpg does give them the chance to alter their business
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model a little bit. it gives him a chance to play around while they are still private. it gives them more opportunities to meet with investors to say, hey, what are you looking for? and make adjustments accordingly. it good for them to buy time. on the flipside, if their private market valuation which is about $2.4 billion is higher than what public market investors will pay, that would be a negative. >> we will continue to follow box's journey to potentially becoming a public company. apple has poached a senior executive from tag heuer. according to multiple reports, they hired patrick pruniaux, the former vice president of sales at tag heuer. he joins angela ahrendts who started as apple's new head of retail and online sales back in may. the hiring could help with the launch of its widely expected smart watch later this year and
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apple could compete in the growing wearable tech sector with samsung. earlier, i spoke with the chief research officer who covers apple for bloomberg news. i started asking by adam what exactly apple is doing. >> apple hired this guy who was a senior sales executive from tag to come over and help with their sales effort. adding to the speculation that this watch will be coming out later this year. in addition to being a technology gadget, a watch is a very fashionable piece. adding this sort of experience gives them the sort of -- another person to help them entice customers to see it as a fashion item. >> if the watch is indeed coming this fall, why just hire this new person now? >> i think the product has been developed for having been developed for quite some time. i think the issue here is
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distribution. would apple be looking at different distribution channels? premium watch dealers. he would come with distribution experience, channel relationships, and potentially this device could ship through very different kind of channel, not just the apple store and online. >> there are some interesting numbers about how big you think wearables are going to be. you think shipments will triple over the next three years, however forster actually thinks the wearable space is going to decline. >> i cannot comment on forster's number. i am not sure about the thought. our market breaks down into three areas. complex accessories which is a form of wearables. it is a wearable you are very familiar with today like the nike fuel band where you connect with a pc or other devices to get your information out. that is actually the fastest
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growing. we don't see the wearables market really becoming significant for another few years, even a year out. that is where we get into smart accessories. those smart accessories are things like galaxy gear where you have apps that you can actually download. beyond that -- go ahead. >> i believe forster is saying a lot of these accessories and chips that can do a lot of things are going to be built into future phones. adam, why would we need a watch at all? >> that is the open question here. right now, none of these products have really taken off. for apple, we are not talking about a thidbit style -- they want something in the multiple of billions of dollars of business. in the consumer market, looking for something to make it much more mainstream and take it beyond a technology in search of a problem and something that your everyday person is going to
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be interested in buying. >> who is to say this market will actually have longevity? >> what it is going to take to get there is we need to stop dehydrating smartphones and putting them in to watch-like devices. it is very difficult to manipulate and get information out of them. what you have to do is create a device which is an extension of one or two applications that nail jobs people want to get done everyday. they can be around health, around the broader health like managing illness, and those can be around fitness. the bottom line is it has to be an expression of you. think about a watch. is it about telling time or about wearing jewelry? i would argue it is the latter today. >> more coming up. ♪
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>> welcome back. i'm emily chang. uberx is now cheaper than a new york city taxi. that is what the company after claiming they will slash prices by 20% in new york. the company says the price cuts are only temporary, but this does reveal more about its pricing strategy. uber, a company you and i have talked about a lot. you have written about it a lot. what do you make of this? >> i think the are just trying to take some market share in new york. one of the things people do not realize is that in places where there is a good cab service, uber has struggled to gain market share. the only way they can go out and do that is by either offering luxury cars or cheaper rates. i think they're opting for cheaper rates right now. >> you have customers who love
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it and customers who hate and drivers who love it and drivers who hate it. is that going to continue? >> i think it will continue because uber represents a company which represents our future where a lot of essential services which the government provided us are getting privatized. i think we are all as a society afraid of that future where government has less control over how we move around. i think that's what it is. i think that is why people get upset about airbnb and the services that are coming online. it is questioning our idea of what public transport it. it tends to leave behind a class of people. that is the biggest story. >> on that note, uber has said
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over and over again that we can raise prices when we want and we can lower them when we want. is that fair? >> that is free market. in a way, if you have a service -- it is a busy time of the year, prices go up and prices go down. air lines do that all the time. i think people regulating that part of the process -- it may be a good idea. our government and legislative bodies are not taking the time to understand what the shift means. they react from a political, vote-gathering standpoint and not really saying how can we work with this technology change to figure out where the future is and how we as a government are relevant. that is the key in the future. >> we know uber has a $17
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billion valuation. having followed tech for two decades, where do you see them going? what is next? >> i cannot tell you how big it will become, but it has already become part of people's daily life. that is a good sign for a company from a future standpoint. they are part of our transportation fabric in big cities. i think over the next few years, you will see it become more and more prevalent. what it means in terms of valuation, it is hard to say. >> i want to talk you about coastal ventures. they had their ceo summit over the weekend. you don't see that very often. we heard from both of them sitting down together and i want you to take a listen to a quote from larry page. >> he said, you guys are doing
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too much stuff and that is true. he was right. >> it is hard not to talk about his voice. it does not sound good. what do you think? >> raspy. it sound like my voice when i used to smoke. >> does it worry you? >> not really. he has never been a very public speaker. i think google believes more in e-mail and textual communications. >> let us talk about what he was saying which is this debate that he had with steve jobs whether google is doing too much and his argument is -- look, we are not doing too much. what do you think? >> i think both companies have different ideologies. i think steve jobs was steve jobs and google is google and
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larry page is larry page. they're thinking about how the world can ask and i think -- from my standpoint, what they are doing makes perfect sense. to the outside world, it seems crazy but it is not. buying nest or whatever it is. the world of technology has gone from the browser into our lives. they are trying to gather as much information about us and our surroundings using whether it is dropcam, nest, android, to figure out how to serve up the best google experience. some of it is scary butm that is who they are. a lot of it is just not connected and not obvious, but it all makes sense to me. i wrote a piece about google car and why it makes sense because
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what they are doing with the google car is essentially the way the technology works and the digital world will come together. the car is a microcosm of that. i don't see anything crazy. they are doing what they are supposed to do. >> we will see if it makes sense to regular people -- us regular people. thank you as always for stopping by. the world cup enters its final week this week and espn is already the big winner. next, our interview with espn president, john skipper. ♪
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>> welcome back. after a wild weekend of world cup action, it is germany, brazil, argentina, and the netherlands all advancing to the semi finals. one group that has already won big -- espn. betty liu got an exclusive interview with espn president john skipper and asked them what they learned in 2010 that is now translating to 2014. >> we applied a lot of the lessons we learned in 2010. all of documentaries we did, the studio shows, the amount of international talent. we decided that everything that worked in 2010 will work better because of the time zone, because it is brazil and how special it is for soccer. more people are coming to soccer in this country. our average television rating is at 39% despite the fact that is that up that much, the digital viewing has been through the roof. this is already the most streamed sporting event of all
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time. we are 70% beyond the sochi olympics. we will be more than double the olympics before this is over. >> i want to go through some of the numbers for live streaming. over 3.3 million for the u.s.-germany match. 3.5 million for the u.s.-belgium match. how do you capitalize on that? >> we are because those people who are watching, we are selling ads. >> you sold more? >> i always wish we sold more. the selling rating should be higher for the world cup. this just means we are delivering. >> it didn't go off without some glitches, as you know. i checked out on twitter just to see what people said while they
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were live streaming. "espn stream bad and getting worse. can we start a kickstarter campaign to buy espn some more server time?" >> we don't need more server time. the problems have been tiny. i am sure that tweet came from the usa-germany game when we had a very small number of people some issues. 99.9% of the people have had a very good experience. you log onto the next game and i promise you it will look great and kudos to our guys. we can now handle an enormous volume of digital users. we had an enormous amount of videos. a lot of bracket participants. we can handle scale. >> you would say you were definitely well-prepared? as prepareed as you would've been for all the people to click online?
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>> it has been. your research is absolutely correct. there were some tweaks. it is tiny. our guys have done great. >> does that mean you can see this enthusiasm translating to live streaming other kinds of sporting events from here on out? >> i don't think there is any doubt. this record will be broken because people are getting used to the idea that they can watch their live games on whatever device they have, wherever they are, under their control, and that is going to keep going on because of the importance of watching sporting events live. >> the world cup rights -- you are not going to have them in 2018 or 2022. >> you really are a spoiler of the party. look, we're concentrating on doing a great job. it is going to be a great event. of course, there will be some regret in not having it, but that is the capitalist system.
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we are going to continue to participate. >> does it make it a bittersweet -- >> no. it is so fun and great. the production, all of our people are doing such a good job that i am just going to enjoy it right now. you don't need to be bittersweet about it. >> thanks to betty liu with espn president, john skipper. he just won bitcoins worth $19 million. what does tim draper have planned for all of his virtual currency? he joins us, next. ♪ >> you are watching "bloomberg west" where we focus on technology and the future of forward thatrought
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the feds raised interest rates. the dow is down nearly 4/10 of a percent. nasdaq was down over three quarters. ♪
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>> you are watching "bloomberg west" where we focus on technology and the future of business. tim draper was the highest bidder on a u.s. government auction of nearly 30,000 bitcoins. it was part of a larger pool of the virtual currency that was seized from a website. he beat out 44 other bidders which were worth about $19 million at the time of auction. he says he will use the currency to help grow a startup he is backing which enables companies to trade and store bitcoins. joining us to discuss, tim draper himself. thank you so much for joining us. so, why?
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why did you bid so high for them? >> this is a very exciting new technology. it can transform our entire economic system in over a long period of time. this was a long-term purchase for me. i am very excited about what it can do, where governments are emerging but they have bad currencies. i'm excited about what it can do for the u.s. a bitcoin transfer is a lot cheaper than using one for a credit card. i am excited about what it can do for the speed of money moving across borders and around the world. it is really exciting and i think everyone should be trying it. everyone should go buy a bitcoin and see how it works. you can buy it or borrow them if you are an institution and set up an account.
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and try spending it -- there is a great company called snap card which allows you to buy it on any site. you can buy things on any site with bitcoin. >> what was the winning bid? we know they were worth about $19 million. we heard you paid a bit more than that. >> i bid more than all the other bidders, apparently. [laughter] >> ok. ok. >> that is the way it goes. there are so many people who can really benefit from this. there is a company that is in argentina. argentina loses the entire value of the argentinian peso every three or four years due to inflation. they are solving that.
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there is a project in africa that is doing the same kind of thing. in mexico, there is one called coin cove. a lot of interesting companies that are really trying to transform the emerging economies. >> you mentioned that one company -- but do we need more big companies like amazon, like starbucks to start accepting bitcoins to enable it to survive as a currency? >> actually, in effect through snap card, you can go to amazon and buy things. it is already happening. and, there are many companies that are making it a great press announcement. i've noticed a few since i have hit the bid that have decided they're going to also accept the bitcoin. it is happening.
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it is a new ecosystem and it is very powerful that is not tied to the whims of a government. if you are not comfortable with your government, bitcoin is a great hedge. in fact, i think any institutional investor needs to hold some bitcoin because it is a possibility that this becomes the main currency of the world. >> why don't we have a big national exchange in the united states yet for bitcoin? >> there are. all these things do take time, but there are -- you go to and there is an exchange which is happening in real time. i encourage you to all go and give that a shot. >> some people are saying this
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was just a publicity stunt. bitcoins are not necessarily that useful in developing countries that maybe they need this liquidity for business. what is the real story? >> this is a really exciting time for people in governments that are not competing well for their citizens. this is a great opportunity for those citizens to go do real commerce and more efficient real commerce than they could with their currencies. this is a great time for them. i have noticed throughout the third world, people are using bitcoin very often. that is exciting for me, exciting for the ecosystem, and it is really exciting for those people in the third world who are actually rising up because they will have the most
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efficient currency system in the planet. >> what are they using it to buy? >> anything. they are using bitcoin to make quick transfers. they convert argentinian pesos into bitcoin because they have more faith in bitcoin. >> what do you think is the potential for an alternative currency, another alternative currency to replace bitcoin in the future? >> i think bitcoin is really the leader and will be for a long time to come because there is a real network. if people are trading bitcoin and buying things in bitcoin, it is going to be harder for another currency to come up. that was my conclusion in bidding on it.
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>> i was speaking with reid hoffman, the cofounder of linkedin and he says bitcoin is actually the number one trend that is on his mind lately. he is thinking about it, you are thinking about it, but you spoke to so many business leaders across the country. for the people that are not on the bitcoin bandwagon, what is the biggest hesitation? what are they worried about? >> they have to try it. it is very simple. you go and buy a bitcoin and once you bought it, try to spend it, and use snap card for that. it is not hard. then, they will start saying it is not bad. actually, it is more efficient than using a credit card or dollars or any currency that is tied to any government. this is a very exciting time. it is a technology that i see coming up that really has an
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amazing future to it. i am very interested in financial technology, new financial technologies because i think the banking world and the investment banking world and the venture capital world are all going to be completely transformed in the next three or four years. i think bitcoin is one of the technologies that makes this very easy to happen. through bitcoin, there are now smart contracts. there are companies that are doing sub ledgers like a network accounting system where if i buy something from you, both of our sub ledgers get updated automatically. a company called e-shares keeps track of all your shares so they don't have the go through many iterations with lawyers and accountants every time some
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shares could move from one place to another. this is as transformative to finance as the internet was to information and communication. >> ok. tim draper, we will talk about more where you are placing your other bets. stay with me. more with tim draper, next. from uber to aereo, we have seen many tech companies face regulations. how can investors decide when a company is worth the risk? draper weighs in, next. ♪
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>> i am emily chang and this is "bloomberg west." this weekend in l.a., a stolen tesla model s split in half and exploded in flames after a high-speed chase ended when the car collided with several vehicles and a light pole. the driver was ejected and currently in critical condition.
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a tesla spokesman told bloomberg west the investigation is still in the hands of l.a. police and fire authorities, but tesla is ready to help as needed. to better understand what happened, tesla has requested to take a look at the vehicle as soon as possible. tesla is one of the bold investments tim draper has made over the years. in the wake of aereo suspending service, what are the risks of disrupting technologies and ideas? back with me is tim draper. tim, welcome back. when you hear the stories about tesla cars, they have had issues with fires before -- does that worry you? >> i think there are far fewer tesla fires than there are gas-powered fires. i think it is actually scarier to be in a gas-powered car now. your general question is a good one.
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i think it is that the incumbent can afford lobbyists who will then sometimes stifle creativity and progress. i think in a lot of cases that happens. whereas a startup does not have a lot of lobbyists and does not think they have to go change things in washington in order to create their new technology. if the technology threatens an existing industry because it is a better way to go for the consumer and everyone, then that threat is sometimes -- instead of competing in the marketplace, sometimes companies will go to washington and try to get a law changed. actually, that brings me to california. the reason that i created it
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because i feel that governments are not close enough to their people now. i think it needs to get closer and more relevant to the people in that region. like silicon valley's government would be very different from a government in central california or one in los angeles. >> on that note, tim, you invested in a number of elon musk's companies -- tesla, spacex -- companies that could have big rewards but certainly have bigger risk and regulatory issues. how do you weigh the pros and cons when you're making those kinds of investment decisions? >> i need to -- fortunately, as a venture capitalist investor, we do have a portfolio approach so occasionally some of the companies will go out of business. however, in the cases of backing elon musk, he really is an
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extraordinary man and has done amazing things for our society. spacex can launch a payload into space for 1/200th the cost nasa launched the exact same payload into space. tesla is great for the environment. i own one. it is unbelievable how well it balances because the batteries are balanced throughout the car rather than having one big gas engine. anyway, elon's awesome. if he wants to do another startup, i will be ready to back him. >> is he the kind of guy that will actually listen to your feedback or do you just give him money and he does whatever he wants? >> pretty much both. he listens to feedback. i would just give him money and he could do whatever he wants. he did do something -- he made
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public the hyperloop idea. i think his hands are full with spacex and tesla. he had this great idea for the hyperloop. at draper university of heroes, we have got the students focused on the hyperloop and coming up with good ways to actually make the hyperloop happen. hyperloop is a very high-speed train that was planned to go from san francisco to l.a. and back. it is great -- what he does is he thinks big anything to the future and then he says, this could happen. then, most of the people say, that will never happen, but a few people gather around him and say how could it happen if we wanted it to happen? that is the way his businesses grow and thrive. it is so exciting. it is wonderful to have them on the earth.
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>> tim draper, thank you as always for joining us today. >> thank you for having me. anybody 18 to 28, go to draper university. it changes your life. >> thank you so much, tim draper. amazon's streaming television service lands a big name in kids programming. we go inside the latest project from the creator of "blue's clues" next. ♪
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>> welcome back. amazon has been ramping up original offerings for its instant prime streaming service to compete with netflix. recently, amazon studios release its second original kids show called "creative galaxy." jon erlichman has more. >> angela santomero is really known in the world of kids
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programming with shows like "blue's clues" and this new show "creative galaxy" was made for amazon as an original. my first question for her was why go to amazon with a show like this? here is what she had to say. >> i have been a huge amazon consumer for a really long time, but really it was because of the head of amazon kids. her idea and vision to create a creativity curriculum and bring that to kids fit so well into what i wanted to do with the program. >> just to be clear -- this is a show that is not dumbing things down. the first episode you talk about art. about pointilism. amazon clearly focused on not just kids programming, but educational programming? >> exactly. i have a background in child development. we research everything we do.
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we never dumb anything down. we are exposing them to all of this expressive vocabulary and making the process of creating crafts and trying to solve problems with art. we are showing picasso and van gogh and exposing kids as much as possible to an amazing art curriculum. >> amazon has this process of launching original shows where they will pick up a pilot, show that pilot to their viewers, get some feedback, and then make a final decision. what did you learn as part of that process? >> it was a huge focus group for me. we go out and talk to kids all the time and parents and for me, it was really about listening and learning with the bigger audience in terms of what people wanted. i was sitting there for forever while the pilot was up just recording what people were saying in order to make a better show. it was exciting, interesting, and a little bit nerve-racking. >> it is interesting. when my daughters are watching
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cable, kids programming on cable, a lot of times there are stuff they want to buy because they are seeing advertisement. in this case, you are not really exposed if you're watching through prime. you are not exposed to advertising. i kind of find it interesting. amazon is a big place that sells a lot of stuff, but there is a difference between the experience through a service like prime and watching on traditional cable. >> preschoolers or kids in general can get what they want when they want it. what we have been able to do is inspire kids to actually go out and make stuff after they watch the show. the music, everything is really all around this idea that we want kids to go out and be able to make something that they might have the materials for right in their kitchen. we are trying to get them to go out and make stuff. >> we do talk a lot about binge viewing, but when we talk about binge viewing, we talk a lot about it with adult programming,
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maybe less with kids. as a creator, what do you have to think about now knowing that it is quite possible that kids are going to be watching maybe three episodes at one time? >> we want to make sure that every show reaches our goals and at the end of the day kids are learning. so, we do tons of research to make sure our goals are being met. i feel good when they're watching the show. i know they are getting something out of it, but also you can pick and choose. we had a little boy tell us the other day he had been learning about van gogh in his classroom and so he wanted to watch an episode about him. you can pick and choose which is also great about having a library there for you. it might not be binge watching, you might be pickier about what you want to watch. we hope everybody is watching all of them as many times as they would like. >> that was "creative galaxy" creator, angela santomero. >> that show streaming now which
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i believe is related to the bwest byte? one number that tells a whole lot. >> 12% is the byte. according to research, out of the 75 top-rated shows on television over the last four years, 12% of them are making their way to amazon. they are not just doing original shows, they are buying the rights to existing tv shows to have lots to offer. >> i have to tell you as an amazon prime customer when you can watch some of the shows for free, it is pretty sweet. how big a competition can they be to netflix? >> netflix is still obviously having the lion's share of that content, but amazon is willing to spend. they like a cheap prices for customers, but they are spending big bucks on the stuff. >> jon, thank you so much and thank you so offer watching this edition of "bloomberg west." see you later. ♪
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>> the following is a paid exclusive brought to you by beach body. >> wow! >> hi, everybody, and welcome. i'm deborah norville, and i am joined by chilli of tlc and


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